TN labor development dept. rewarded despite overspending $73M

NASHVILLE, TN (WSMV) -

Payments sent to dead people, $73 million wasted and long waits for unemployment checks probably doesn't sound like "exemplary performance" in state government, but that is what the federal government said about the Tennessee Department of Labor and Workforce Development when it handed over more than $1 million of your tax dollars to the agency as a reward for its performance.

Just weeks before the release of a scathing state audit and the resignations of the top officials in the department, the Channel 4 I-Team found nearly 150 employees from the Department of Labor and Workforce Development gathered at the Opryland Hotel for a training conference, enjoying fine dining, nice rooms and beautiful atrium views.

Nearly 20 percent of those employees would soon be headed for the unemployment line themselves, but taxpayers picked up the bill to train them anyway - all because the federal government held the department up as an example of a job well done.

The Channel 4 I-Team was also at the Opryland conference the department called "Promising Practices."

"The whole idea of the conference was to center around us bringing together our services and making sure there is not duplication of services or wasted money," said Jeff Hentschel, spokesman for the Department of Labor and Workforce Development.

That's just what state auditors say that department did for years: wasted money.

The comptroller's audit, released in March, said the agency misspent $73 million in unemployment benefits over the past six years - paying out to dead people and prisoners - and took too long to provide benefits to people who actually needed it.

Still, while all that was going on, the U.S. Department of Labor decided things were going so well in Tennessee the state deserved a $1.3 million award for exemplary performance.

The Channel 4 I-Team asked how misspending $73 million in tax dollars qualifies as exemplary performance.

"Well, that $73 million, we're talking about different pools of money here. We're talking about overpayments of unemployment insurance. This money we spent on the conference could not have been spent toward anything else," Hentschel said.

In the eyes of the federal government, the state's labor department performed exemplary service because the Volunteer State is one of eight states that met certain benchmarks when it comes to training jobseekers and helping them find work.

"We're second in the nation as far as placing people in high-paid jobs, which they retain for a long period of time," Hentschel said.

The government sets those benchmarks to make sure they're handing federal dollars to departments who have shown themselves to be effective, and a U.S. Department of Labor representative said the problems pointed out in the state audit mainly occurred in 2012 while the award is based on performance in 2010.

Plus, the federal government asked Tennessee to submit a plan for how it would use the reward.

"We proposed things like spending on adult education and increasing the skills of the workforce of Tennesseans and also this conference, and it was approved at the highest levels of the DOL," Hentschel said.

That plan included spending nearly $86,000 for the three-day stay at Opryland to train employees on the best ways to help jobseekers. Taxpayers spent close to $70,000 for hotel rooms, more than $6,000 for their transportation and their meals cost more than $9,000.

However, the Channel 4 I-Team learned 26 of the 134 employees who attended that three-day training conference don't even work for the state anymore.

Most of them were part of a "planned workforce reduction" in closing the state's job centers and rapid response team. Yet, taxpayers picked up the tab to improve their skills for jobs they wouldn't have for much longer.

The group of departed employees includes former Commissioner Karla Davis, who stepped down the very day the state's audit came out.

A $300,000 chunk of the federal award money set aside for Davis' "commissioner's project" has yet to be used, and the new commissioner is working on a new plan for the funds.

Despite all the turmoil in the department, the state said it used the federal money the right way: to help people find work.

"We got this award because we were a high performer. In the face of future reductions in federal funding, this training is going to help us maintain that status," Hentschel said.

Again, the federal award was based on the department's performance in the year 2010, but the comptroller's audit found $73 million in overpayments over the past six years.

The U.S. Department of Labor would not agree to an interview for this story.

The Channel 4 I-Team also reached out to former commissioner Karla Davis for comment, but she did not return our call or email.

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